Fraudulent Concealment

Neuman v. Gaffney, 2018 IL App (2d) 180184-U

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In September 1997, a Federal District Court ruled partially in favor of a class of plaintiffs against the State of Illinois for hiring discrimination, although the ruling did not address back pay or other pay relief.  In April 1999, attorney John Gaffney (“Gaffney”) filed a putative class action against the State of Illinois for back pay on behalf of John Mittvick (“Mittvick”) and Edward Urban as plaintiffs and class representatives.  The State moved to dismiss without prejudice, asserting the plaintiffs had failed to timely file charges of discrimination with the Equal Employment Opportunity Commission.  Before that motion could be granted, Gaffney filed his own motion to dismiss without prejudice, which was granted.  Gaffney notified his clients of this by letter, telling them he could no longer represent them and that they should join another class action on this matter already in progress.

Nearly sixteen years later, Robert Neuman (“Neuman”) filed a petition to intervene in the 1999 case, having supposedly just learned of it.  He claimed that he was an absent class member in the 1997 and 1999 cases, and that the 1999 case had not been validly dismissed.  The District Court dismissed Neuman’s petition, holding that dismissal of the 1999 case was valid.  Neuman appealed, but lost when the Seventh Circuit held that he “was already aware of a possible case in 2001 and that a diligent person would have investigated.”  Id. at ¶9.  Neuman then sued Gaffney for legal malpractice, alleging Gaffney had breached his fiduciary duty to notify unknown and unnamed absent class members prior to dismissal of the 1999 suit.  Gaffney successfully moved to dismiss because the six-year statute of repose for legal malpractice claims in Illinois had already lapsed.

On appeal, Neuman argued that the statute of repose should not have been applied because Gaffney had fraudulently concealed important information like the fact that the 1999 case had been voluntarily dismissed, which caused Mittvick not to pursue it further. This alleged concealment, he argued, would toll the statute of repose.  However, the appellate court held that whether or not Gaffney specified to Mittvick that his case had been dismissed voluntarily made no difference.  After reviewing Gaffney’s letter to Mittvick, the Court declared, “there is no indication that he attempted to conceal anything relevant from Mittvick.  He told Mittvick that the complaint had been dismissed and that Mittvick would have to seek a new attorney going forward.”  Id. at ¶22.  Despite Neuman’s insistence that Gaffney’s letter contained misrepresentations, the Court held that “such misrepresentations, even fraudulent ones, are not equivalent to acts of fraudulent concealment.”  Id.

Neuman v. Gaffney, 2018 IL App (2d) 180184-U

(This is for informational purposes and is not legal advice.)

Barefoot Architect , Inc. v. Sabo & Zahn, 2017 IL App (1st) 162616-U

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In this unpublished opinion, the First District affirmed the dismissal of a legal malpractice claim on statute of limitations grounds and a breach of fiduciary duty claim resulting from a bankruptcy case where the plaintiff had hired attorneys other than the defendants to represent in those proceedings. The court held that, ordinarily, a cause of action for malpractice accrues when a court enters an adverse judgment against a malpractice plaintiff. Here, the statute of limitations had run even using the date the appellate court entered an adverse judgment against the plaintiff. The court held that the lawyers’ statements that the court had erred did not establish were insufficient to preclude application of the statute of limitations under theories of fraudulent concealment or equitable estoppel.

Barefoot Architect , Inc. v. Sabo & Zahn, 2017 IL App (1st) 162616-U

(This is for informational purposes and is not legal advice.)

Abrahamson v. Greenberg Traurig, LLP, 2017 Il App (1st) 162226-U

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In this unpublished opinion, the First District affirmed the dismissal of a legal malpractice claim on statute of limitations and statute of repose grounds.  It rejected the plaintiff’s argument that equitable estoppel and fraudulent concealment tolled the statutes.

Abrahamson v. Greenberg Traurig, LLP, 2017 Il App (1st) 162226-U

(This is for informational purposes and is not legal advice.)

Recent Illinois Case: Dobbins v. Zager

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In this unpublished order, the First District affirmed the dismissal of a legal malpractice claim on statute of repose grounds.   The court held that neither equitable estoppel nor fraudulent concealment saved the claim.  The court emphasized that misrepresentations that toll the statute of repose must be different from the representations that constitute the alleged malpractice.

Dobbins v. Zager, 2016 IL App (1st) 151175-U

(This is for informational purposes and is not legal advice.)

Recent Illinois Case: Pierce v. Vojta

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In this unpublished opinion, the First District affirmed the dismissal of a legal malpractice complaint on statute of limitations grounds.   The court also rejected plaintiff’s argument that her lawyers’ failure to inform her of her malpractice claim against them constituted fraudulent concealment.

Pierce v. Vojta, 2015 IL App (1st) 142510-U

(This is for informational purposes and is not legal advice.)


Recent Illinois Case: Beshkov v. Katten Muchin Rosenman LLP

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Legal malpractice claim was barred under the statute of limitations and the statute of repose.   The court held that, assuming that the defendant fraudulently concealed the claim, plaintiff’s claim was still barred because she had a reasonable amount of time (9 months) within which to file her action after she discovered it.   The court rejected arguments that the “reasonable time” exception to the fraudulent concealment statute had been rejected by the supreme court; that the court could not decide plaintiff’s discovery date as a matter of law; and that the court could not decide what was a reasonable time to file as a matter of law.

Beshkov v. Katten Muchin Rosenman LLP, 2015 IL App (1st) 142455-U

(This is for informational purposes and is not legal advice.)

First District Rules Legal Malpractice Claim Time-Barred; Reiterates Key Timeliness Principles

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by Matthew J. Singer, Attorney, Novack and Macey LLP

Matthew J. Singer - Novack and Macey - Sept 2014 hi res
Matthew J. Singer

In a recent decision, Lamet v. Levin, 2015 IL App (1st) 143105, the First District Court of Appeals affirmed the dismissal of a time-barred legal malpractice claim.  In the course of rejecting plaintiff’s arguments, the court emphasized several significant hurdles for legal-malpractice plaintiffs seeking to recover for their lawyers’ conduct in the distant past.

Factual Background:  In 1994, Plaintiff Client (himself a lawyer) hired Defendant Attorney to represent him in a lawsuit.  In that suit, Client’s landlord claimed that Client owed it $34,000 in unpaid rent.  Attorney raised defenses and counterclaims on Client’s behalf based on two untrue factual allegations.  First, Attorney asserted that the rented space was around 2000 square feet, when in reality it was closer to 3000.  Second, Attorney claimed incorrectly that another tenant was being billed for the same space.  The suit was eventually dismissed for want of prosecution.

In 2002, the landlord refiled the action against Client, this time seeking $50,000 in damages.  Attorney relied on the same erroneous defenses he had pursued in the earlier action.

After the case dragged on for nearly a decade, Client consulted with additional attorneys in 2011.  These attorneys informed Client that Attorney’s assertions were indefensible and that Client had no legitimate defense to the suit.  Client ended up settling with the landlord for $150,000.  Client then sued Attorney in 2011 for legal malpractice, alleging that he was injured by Attorney’s pursuit of frivolous defenses.

Statute of Repose:  The First District held that Client’s legal malpractice claim was barred by Illinois’ six-year statute of repose.  735 ILCS 5/13-214.3(c).  Client argued that the statute of repose did not begin running as long as Attorney continued to pursue the unsupported defenses he had first put forward in 1994.  The court rejected this argument, concluding that Client’s negligence claim was, at its heart, based on Attorney’s failure to recognize and advise Client — in 1994 — that Client had no bona fide defenses.  Although Attorney continued to pursue these faulty defenses for more than a decade, that was irrelevant to determining when the statute of repose was triggered.  Accordingly, the statute of repose began running in 1994 and had long since expired when Client filed suit in 2011.

Statute of Limitations:  Apart from the fact that the statute of repose barred Client’s claims, the First District also held that Client’s claim relating to Attorney’s unfounded square-footage defense was time-barred.  In 1994, Client hired an architect to measure the square-footage of the office, which was over 2,700 square feet.  Based on the architect’s measurements, Client was on notice that the office was much larger than 2,000 square feet, contrary to Attorney’s assertions in the litigation against the landlord.  Because Client knew or should have known in 1994 that Attorney’s square-footage defense was factually unsupported, the two-year statute of limitations for legal malpractice, 735 ILCS 5/13-214.3(b), started running almost two decades before Client filed suit.

Fraudulent Concealment:  Finally, the First District rejected Client’s argument that Attorney “fraudulently concealed” his legal malpractice claim by failing to inform Client of his alleged malpractice.  Although Client did not allege any action by Attorney to conceal a cause of action, he argued that Attorney, as a fiduciary, had an affirmative duty to inform him of a potential malpractice claim.  The court squarely rejected this argument, explaining that “[t]his court has rejected the notion that a lawyer has an affirmative obligation to advise a client of the grounds to sue him for legal malpractice.”  Thus, there was no fraudulent concealment — and no tolling of the statute of repose or limitations — so Client’s claim was time-barred.

In sum, although Lamet is hardly a groundbreaking decision, it serves as a helpful reminder of key principles governing timeliness of legal malpractice claims.

(This is for informational purposes and is not legal advice.)